The police statement said that Mr Netanyahu, after receiving gifts, pushed for the Milchan Law, which would have ensured that Israelis who return to live in Israel from abroad were exempt from paying taxes for 10 years.

The proposal was eventually blocked by the finance ministry.

Police say Mr Netanyahu is also suspected of fraud and breach of trust in a case involving Australian billionaire James Packer.

Israel’s Channel 10 reported in December that Mr Packer told investigators he gave the prime minister and his wife Sara gifts.